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New Bankruptcy Law in Canada – 2009
After years of waiting, new bankruptcy rules become effective in Canada on September 18, 2009. (You can read our opinion on the new rules on our bankruptcy blog). The federal government implemented the new bankruptcy Canada rules in two stages. The first set of rules came into effect on July 8, 2008:
The remainder of the rules become effective on September 18, 2009. The most significant changes include:
- All bankrupts are now subject to an income test. If you have surplus income of $200 or greater each month, the bankruptcy period is automatically extended from 9 months to 21 months (or in the case of a second bankruptcy, the bankruptcy period is extended to 36 months);
- The debt limit to be eligible to file a consumer proposal has been increased from $75,000 to $250,000.
- A secured lender cannot terminate a contract simply due to the filing of bankruptcy. For example, if a bankrupt has a car loan and the payments are up to date, they may continue to pay the car loan and keep the car if they go bankrupt.
The team at Hoyes, Michalos & Associates Inc. is reviewing the new rules, and will post more information as it becomes available.
For more details, please refer to our articles on the new bankruptcy rules:
New Bankruptcy Rules - What You Need To Know
- What do I need to know? - A quick summary of the new rules
- How will consumer proposals change?
- New bankruptcy rules: Has the bankruptcy period in Canada been extended?
- Bankruptcy reform: If you have high tax debts, your bankruptcy will last longer
- Bankruptcy reform: RRSPs are now exempt from seizure in a bankruptcy (under certain conditions)
- Tax refunds in bankruptcy now seized for the entire year of bankruptcy
- Student loans now automatically discharged after seven years
- Student loans may be more difficult to deal with in a consumer proposal
Please note that these articles are our comments on legislation that has not yet come into force. Until these rules come into effect, changes are possible. As we continue to study the legislation, our interpretations and opinions may change, so please contact our Ontario bankruptcy offices for further information on bankruptcy reform in Canada.
Additional information can be found at the external links listed below.
External Links
- Hoyes Michalos Blog with our comments on new bankruptcy legislation.
- Canadian
Student Loan Bankruptcy Blog
Blog site; devoted specifically to student loan issues in Canadian bankruptcies - House
of Commons: Text of Bill C-12
Government web site; shows the text of Bill C-12; the government's summary of the new rules can be found on the Superintendent of Bankruptcy web site. - Bankruptcy
Canada
Web site offering free information on personal bankruptcy in Canada
Our bankruptcy offices in Ontario
Contact a bankruptcy trustee
About bankruptcy trustees at Hoyes Michalos
